Insurance giant Allianz and its related arm AWP Australia (AWP) have been hit with a $1.5 million penalty by the Federal Court following misleading sales of travel insurance policies through Expedia websites.
The Federal Court found Allianz and AWP engaged in misleading and deceptive conduct when selling travel insurance by failing to correctly state how premiums were calculated and allowing insurance to be sold to ineligible customers.
The court also concluded that both firms had breached their financial services licences by failing to correctly disclose how premiums were calculated in product disclosure statements so that consumers were not given accurate information on the travel insurance they were purchasing.
The case was brought to Court by the Australian Securities & Investments Commission (ASIC), with their legal costs to be paid by both parties.
“ASIC is committed to improving the outcomes for Australian consumers who purchase insurance. The insurance industry needs to be transparent and accurate when selling and promoting their products,” ASIC Deputy Chair Sarah Court said.
Chief Justice Allop found Allianz and AWP also failed to prevent Expedia websites from misusing a quote from the Department of Foreign Affairs and Trade about the importance of purchasing travel insurance.
“People take out travel insurance for peace of mind and to protect their families,” Court said.
“The value of an insurance policy is in the promise — that a consumer can feel confident and secure that they will be looked after if something goes wrong.
"ASIC remains committed to ensuring that consumers’ experience matches that expectation”.
AWP was ordered to pay $1,140,000 and Allianz $360,000.
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